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Battle lines are being drawn over whether the Federal Communications
Commission should regulate the interconnection of telecommunications networks
that are based on internet protocol (IP) technology.

The issue has become a rallying cause for trade associations representing
competitors to big phone companies like AT&T Inc. and Verizon Communications
Inc. AT&T has been pushing the FCC to allow big phone companies to phase out
their century-old networks of copper wires that wind their way through the
country--and some of the “legacy” services offered over them.

Four trade groups--the American Cable Association, Competitive Carriers
Association, COMPTEL, and the Computer and Communications Industry
Association--wrote to the FCC last week to urge the agency to continue to impose
the same interconnection and arbitration obligations on AT&T and Verizon,
even while they build newer, all-IP, networks.

“The policy justifications for requiring ILECs [incumbent local exchange
carriers] to interconnect their networks on reasonable and nondiscriminatory
terms do not diminish simply because the technology for exchanging
telecommunications traffic changes,” the associations said in a letter dated
March 21. “To the contrary, the commission has explained in the context of the
IP transition that '[f]or competition to thrive, the principle of
interconnection … needs to be maintained.' ”

Negotiating Interconnection Pacts

Under the Communications Act of 1934, as amended, AT&T, Verizon, and all
ILECs must negotiate interconnection agreements in “good faith.”

That requirement, the associations argue, “do[es] not vary based on whether
one or both of the interconnecting providers is using TDM [time-division
multiplexing], IP, or another technology in their underlying networks.”
Specifically, Section 251(a) of the Act requires all telecommunications carriers
“to interconnect [their networks] directly or indirectly with the facilities and
equipment of other carriers,” without reference to the technology or protocol
used in such networks. And, similarly, Section 251(b)(5) requires local exchange
carriers “to establish reciprocal compensation arrangements for the transport
and termination of telecommunications,” again without technology-based
limitations, they noted.

But AT&T has said that any regulation of interconnection between two
providers of IP-based services would be “needless and harmful.”

In a filing with the agency in late January, AT&T said the commission
lacks authority under the act to regulate interconnection between two providers
of IP-based “information services,” as retail voice-over-internet protocol, or
VoIP, service providers and internet service providers are now classified. As
written, Section 251(a) requires every “telecommunications carrier” to
interconnect directly or indirectly with “other telecommunications carriers.”
Providers of VoIP and other IP-enabled services are not telecommunications
carriers, AT&T pointed out and, as such, Section 251(a) is doubly
inapplicable where both the calling and the called parties are communicating via
VoIP or similar IP services. Similarly, Section 251(c) does not apply to
IP-to-IP interconnection because, among other things, information service
providers have no interconnection rights under Subsection (c)(2), it said.

Should FCC Regulate?

Weighing in on the issue at a Free State Foundation conference last week,
Robert Quinn, vice president of federal regulatory affairs for AT&T, said
the FCC should allow markets to determine how IP traffic is exchanged, rather
than move to enact new regulations.

“We were able to interconnect the entire world wide internet on an IP basis
with no regulatory intervention from the states, from the [U.S.] federal
government, or from any the governments across the entire world,” Quinn
said.

Added Rebecca Arbogast, vice president for global public policy at Comcast
Corp.: “I think we need to be very practical and grounded on what has actually
worked in the real world. To muck that up would be a shame.”

FCC commissioners, too, have spoken out on the issue recently. Democratic
Commissioner Mignon Clyburn, who is in line to become acting chairman of the FCC
when current Chairman Julius Genachowski steps down, suggested in a speech March
15 to the Consumer Federation of America that IP interconnection for voice
services is squarely in the FCC's statutory purview.

“Fundamentally, the commission expects that all [telecommunications] carriers
negotiate requests for interconnection and exchange of voice traffic over the
new internet protocol systems,” Clyburn said. “This will ensure that no
consumer, regardless of what voice service system they use, is unable to
communicate with those on other systems. Furthermore, even as carriers invest in
this new technology, competitive and affordable alternatives must remain in
place so that consumers have the option to choose what voice service best suits
their individual communication needs.”

In her speech, she also tried to quell arguments that an FCC role in IP
interconnection would constitute “regulation of the internet.” “Providers that
are using IP to deliver voice service over their proprietary networks are not
using the internet to do so,” she said.

Meanwhile, Genachowski, speaking at the first workshop of the agency's
Technology Transitions Policy Task Force held March 18, reiterated that
technological advancements “don't change the FCC's mission.” Instead, the agency
must continue to be guided by a core set of principles: competition, consumer
protection, universal service, and public safety.

“[W]hile some like to refer to the 'competitive, all-IP world' as if
'competition' and 'IP' are synonyms, we know that's not true,” he said. “We need
to take a more sophisticated, data-driven approach to determine which policies
to keep for today's markets, which to add or modify, and which to
eliminate.”

For years, the FCC has been grappling with the regulatory classification of
VoIP services, and could be compelled to make a final determination before
settling the question of whether the interconnection provisions of the act apply
to IP networks.

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